By The Weekly Vision Business Desk
Kenya’s economy was close to stagnation in February, according to the Stanbic Purchasing Managers’ Index (PMI), which fell closer to its neutral 50.0 threshold. Sales volumes across the private sector rose only marginally, prompting firms to put the brakes on output growth. The expansion in purchasing activity also eased, supporting a weaker uptick in input prices and, in turn, prices charged.
The Kenya PMI dropped for the third consecutive month, from 51.9 in January to 50.4 in February, indicating only a marginal improvement in the health of the private sector economy. Notably, the upturn was the slowest recorded in the current six-month growth sequence. After a solid expansionary run over the past few months, output volumes were close to stalling in February, with the respective seasonally adjusted index recording just above its neutral level. Around 33 per cent of surveyed companies posted higher activity, while 32 per cent reported a decline, with slowing new order growth and mounting macroeconomic pressures cited as key headwinds.
Although total sales volumes rose in February, the pace of growth was subdued and the softest in the current six-month expansion sequence. Many survey panellists reported that introducing new products and services, expanding marketing efforts and offering price promotions had helped support sales. At the same time, other firms pointed to difficult economic conditions, low customer purchasing power and strong competition.
Sector trends were mixed, with construction, wholesale and retail, and services registering sales growth, while agriculture and manufacturing recorded declines. The slowdown in new business growth led to a smaller increase in purchasing activity during February. Consequently, inventory levels rose at their slowest pace in seven months. While companies continued to benefit from shorter delivery times, the rate of improvement eased from January amid reports of busy vendors, road traffic and port congestion.
At the same time, Kenyan companies indicated that workloads remained heavy, with some firms struggling to complete backlogs on time. Outstanding work levels were broadly unchanged after eight consecutive months of depletion. This helped sustain hiring growth, with firms recruiting additional workers to ease pressure on existing staff.
On prices, the February survey data indicated the slowest increase in overall input costs in three months, as purchase prices and staff wages rose at a slower pace. However, increases in material prices and the impact of higher VAT were still cited by respondents. With cost pressures easing and market conditions remaining challenging, Kenyan companies raised their selling prices at the slowest pace since last November.
The PMI also showed that Kenyan firms remained confident about the 12-month outlook for business activity in February. Just over a fifth of respondents expect output to rise, citing hopes of stronger demand, improved economic conditions, planned product innovation and increased marketing activity. Optimism remained well above the average recorded in 2025.
Christopher Legilisho, Economist at Standard Bank, commented: “The Stanbic Kenya PMI cooled in February as firms reported only modest growth in new orders and steady output. While the outcome remained expansionary, some businesses were hampered by increased competition and an uncertain economic environment. Although macroeconomic conditions have improved, the broader economy has yet to fully reflect these gains, and sections of the private sector continue to feel the strain.
“However, expectations for the next 12 months remained steady. About a fifth of firms surveyed remain optimistic about future output. Job growth momentum was sustained, signalling underlying improvement in the private sector. Purchasing demand also remained resilient as both quantities purchased and inventories increased, albeit at a slower pace. Input prices rose in February due to higher operating costs and tax concerns, although improved supply conditions helped contain the increases. Output prices rose only slightly as discounts and stronger competition limited price growth.”
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